- The Kiwi peaked at a five-day high at 0.6111 and then fell to the 0.6065 area.
- Despite labor demand in the US showing a deceleration, the figures showed a robust employment growth.
- The Greenback gained interest on the back of increasing US yields.
The NZD/USD pair erased gains which saw the Kiwi surging to the 0.6111 area at the end of the week and fell towards the 0.6065 area, in response to strong labor market data from the US. The data suggested a potential reassessment of additional rate hikes by the Federal Reserve (Fed) which consequently favored the US Dollar amid rising US bond yields.
Greenback gains on rising US bond yields following NFP
According to the US Bureau of Labor Statistics, employment in the United States surpassed expectations by increasing by 339k in May, exceeding the consensus forecast of 190k. However, the Unemployment Rate rose slightly, reaching 3.7% instead of the expected 3.5%. Average Hourly Earnings, which serves as a gauge of wage inflation, stood at 4.3% YoY, slightly below the projected 4.4%.
The overall labor market outlook suggests that labor demand is showing some deceleration but the robust employment growth and the increasing inflationary pressures indicate that these developments make a case for the Fed to reconsider a 25 basis points (bps) hike in the upcoming June meeting. As a result, US bond yields are experiencing an upward trend. The 10-year bond yield has increased to 3.68%, reflecting a gain of 2.70% for the day. Similarly, the 2-year yield stands at 4.51% with an increase of 3.64%, and the 5-year yield is at 3.84% up by 3.81%.
As the Fed officials mention, their ultimate goal is to assure full-employment and price stability, so the May Consumer Price Index (CPI), to be release next week, will play a crucial role in influencing the expectations and considerations of the Federal Open Market Committee (FOMC) regarding the next interest rate decision. As for now, the CME FedWatch tool suggests markets are still discounting higher probabilities of no hike for the next June 13-14 meeting but the case of a 25 bps hike gained some relevance.
Levels to watch
According to the daily chart, the NZD/USD holds a bearish outlook for the short term as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) suggest that the sellers are in control while the pair trades below its main moving averages.
In case of further downside, support levels line up at the 0.6050 area and below at the 0.6025 zone and the 0.60 psychological mark. On the upside, resistances line up at the daily high around 0.6111 followed by the 200 and 20-day Simple Moving Average (SMA) at 0.6150 and 0.6180 respectively.
|Today last price||0.6064|
|Today Daily Change||-0.0007|
|Today Daily Change %||-0.12|
|Today daily open||0.6071|
|Previous Daily High||0.6078|
|Previous Daily Low||0.599|
|Previous Weekly High||0.6303|
|Previous Weekly Low||0.6032|
|Previous Monthly High||0.6385|
|Previous Monthly Low||0.5985|
|Daily Fibonacci 38.2%||0.6044|
|Daily Fibonacci 61.8%||0.6024|
|Daily Pivot Point S1||0.6014|
|Daily Pivot Point S2||0.5958|
|Daily Pivot Point S3||0.5926|
|Daily Pivot Point R1||0.6102|
|Daily Pivot Point R2||0.6134|
|Daily Pivot Point R3||0.619|
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.